Case Law Details
Ashok Kumar Makhija Vs Union of India (Through Secretary) And Ors. (Delhi High Court)
The case of Ashok Kumar Makhija vs. Union of India (Through Secretary) And Ors., heard in the Delhi High Court, revolves around the issuance of notices under Sections 148 and 148A(b) of the Income Tax Act, 1961 (the Act), and subsequent reassessment proceedings for the Assessment Year (AY) 2017-18. The petitioner, engaged in wholesale trading of pan masala and beetle nut, contested the validity of the notices issued by the Revenue, alleging lack of jurisdiction and unlawful initiation of reassessment proceedings.
The petitioner initially filed his Income Tax Return (ITR) for AY 2017-18, declaring a total income. However, the Revenue initiated scrutiny assessment concerning capital gains/loss on property sales and cash deposits during the demonetization period. The petitioner claimed these deposits were proceeds from his business sales. Subsequently, an assessment order was passed, accepting the filed ITR.
Later, the Revenue issued a notice under Section 148 of the Act, reopening the assessment for AY 2017-18, alleging income escapement. However, this notice was quashed following legal precedents. Subsequently, based on a Supreme Court ruling, the Revenue issued a notice under Section 148A(b) of the Act, initiating reassessment proceedings due to an alleged exponential increase in the petitioner’s sales turnover during AY 2017-18.
The petitioner, represented by counsel Kalrav Mehrotra, argued that the reassessment lacked jurisdiction and was unlawful, alleging it was based solely on a change of opinion without new substantial evidence. Additionally, Mehrotra contended that the notice should have been issued by specific designated authorities outlined in Section 151 of the Act, which the Principal Commissioner of Income Tax, Delhi-10, did not fall under. This argument was supported by referencing a relevant court decision.
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